EC410412RO
                             STATE OF NEW YORK
                    DIVISION OF HOUSING AND COMMUNITY RENEWAL
                          OFFICE OF RENT ADMINISTRATION
                                   GERTZ PLAZA
                             92-31 UNION HALL STREET
                             JAMAICA, NEW YORK 11433

      ------------------------------------X    SJR 5586
      IN THE MATTER OF THE ADMINISTRATIVE :    ADMINISTRATIVE REVIEW
      APPEAL OF                                DOCKET NO. EC410412RO

                                          :    DISTRICT RENT OFFICE
           David Frankel Realty Co., Inc.      DOCKET NO. 30900
                                            
                                               TENANT: Norman and Joan 
                                                             Evans            
              
                            PETITIONER    : 
      ------------------------------------X                             

          ORDER AND OPINION GRANTING PETITION FOR ADMINISTRATIVE REVIEW
                     AND MODIFYING COMMISSIONER'S PRIOR ORDER
                          AND OPINION AFTER COURT REMIT


      This proceeding was commenced by the filing of an objection to apartment 
      registration, including, among other things, an overcharge complaint, by 
      the tenants concerning housing accommodations known as Apartment 18C at 
      400 East 57th Street, New York, New York.  The proceeding was processed 
      by the Administrator as a fair market rent appeal.

      By order issued February 22, 1990, the Administrator determined the fair 
      market rent pursuant to the special fair market rent guidelines 
      promulgated by the New York City Rent Guidelines Board for use in 
      calculating fair market rent appeals, and directed the owner to refund 
      all excess rent collected to the tenants.  On March 26, 1990, the owner 
      filed an administrative appeal of said order, in which he enclosed a 
      photocopy of the owner's answer to a Division notice, along with 
      supporting documents, which was date-stamped received by the Division on 
      February 16, 1990.  That February 16, 1990 answer had not reached the 
      Administrator's file prior to issuance of the Administrator's order.

      Subsequent thereto, the petitioner filed a petition in the Supreme Court 
      pursuant to Article 78 of the Civil Practice Law and Rules requesting 
      that the "deemed denial" of the petitioner's administrative appeal be 
      annulled.  The proceeding was remitted to the DHCR for a determination 
      of the petitioner's administrative appeal.  By order issued on July 18, 
      1991, the Commissioner rejected the owner's February 16, 1990 submission 
      as untimely and denied the petition for administrative review.  A 
      detailed chronology of that proceeding appears in the July 18, 1991 
      order of the Commissioner. 

      The owner thereafter filed an Article 78 petition in Supreme Court, 
      challenging the Commissioner's order.  On November 15, 1991 an order was 












          EC410412RO

      signed by Justice Joan B. Lobis remitting the proceeding to the DHCR for 
      a new determination based on all the evidence submitted theretofore.

      In accordance with the court order, the Commissioner will now consider 
      the owner's February 16, 1990 submission.

      With its February 16, 1990 submission the owner submitted a completed 
      Schedule of Comparability Data (Schedule 1) for the subject line of 
      apartments and for the B line of apartments.  This schedule indicated 
      that there are no other apartments in the same line as the subject 
      apartment which contain the same number of rooms as the subject 
      apartment and were rented for the first time as a stabilized apartment 
      between April 1, 1978 and March 31, 1983.

      The owner asserted that Apartments 14B and 17B should be utilized in the 
      comparability study.  The owner stated that the first stabilized tenant 
      of Apartment 14B took occupancy of that apartment pursuant to a lease 
      commencing April 1, 1980 and expiring March 31, 1982 at a rent of 
      $1025.00 monthly.  The owner included the initial stabilized lease for 
      Apartment 14B (the Commissioner's earlier order erroneously stated that 
      the owner had failed to submit that lease), a copy of a DC-2 notice 
      addressed to the first stabilized tenant of Apartment 14B dated July 1, 
      1980, and a signed return receipt for certified mail postmarked July 12, 
      1980.  

      Concerning Apartment 17B, the owner stated that that apartment was 
      rented to an initial stabilized tenant pursuant to a lease commencing 
      October 1, 1979 and expiring September 30, 1981 at a rent of $812.00 per 
      month.  The owner submitted a copy of an Office of Rent Control 
      Decontrol Order (Docket No. 2DPR2554) dated July 23, 1979 based on non- 
      primary residence, a rent ledger indicating an initial stabilized rental 
      of Apt. 17B pursuant to a lease commencing October 1, 1979 and expiring 
      September 30, 1981 at a monthly rent of $812.00 and an initial apartment 
      registration form (Form RR-1) and proof of service (a Post Office 
      Certificate of Mailing Form #PO3877 postmarked June 28, 1984) on the 
      tenant of Apt. 17B.  

      In an answer to the owner's petition for administrative review which 
      included the owner's February 16, 1990 submission, the tenant asserted, 
      among other things, that the owner cannot arbitrarily choose one 
      apartment in a line for comparability purposes but must submit 
      documentation for the entire line; and that the owner failed to submit 
      a DC-2 notice with proof of service for Apartment 17B.  In reply to the 
      tenant's answer, the owner stated, among other things, that it submitted 
      all required information for the B and C lines of apartments.  (The 
      owner incorrectly stated this as the B and D lines.)


      The Commissioner is of the opinion that this petition should be granted.

      Pursuant to Section 2522.3(e) and (f) of the Rent Stabilization Code 
      effective May 1, 1987, applicable to fair market rent appeals filed 






          EC410412RO

      after April 1, 1984, comparability will be determined based on the 
      following:

           (e)(1) Legal regulated rents, for which the time to file a 
           Fair Market Rent Appeal has expired and no Fair Market Rent 
           Appeal is then pending, or the Fair Market Rent Appeal has 
           been finally determined, charged pursuant to a lease 
           commencing within a four year period prior to, or a one-year 
           period subsequent to, the commencement date of the initial 
           lease for the housing accommodation involved; and 

           (2) at the owner's option, market rents in effect for other 
           comparable housing accommodations on the date of the initial 
           lease for the housing accommodation involved; and

           (f) where the rents of the comparable housing accommodations 
           being considered are legal regulated rents, for which the time 
           to file a fair market rent appeal has expired, and such rents 
           are charged pursuant to a lease ending more than one year 
           prior to the commencement date of the initial lease for the 
           subject housing accommodation, such rents shall be updated by 
           guidelines increases for one year renewal leases, commencing 
           with the expiration of the initial lease for the comparable 
           housing accommodation to a date with 12 months prior to the 
           renting of the housing accommodation involved. 

      Pursuant to Sections 2522.3(c)(2), 2526.1(a)(2)(ii), and 2528.2(d) of 
      the Rent Stabilization Code, a tenant must file a challenge to the 
      initial apartment registration (overcharge complaint or fair market rent 
      appeal) which 90 days of service of the registration form on the tenant 
      by certified mail.  Section 2528.2(d) further provides that for 
      registrations served prior to the effective date of that section, any 
      method of service permitted by the DHCR at the time of service shall be 
      deemed to have the same effect as service by certified mailing.

      The Division's instructions for service of the initial rent registration 
      on the tenant by the owner provided for hand delivery of the envelope 
      with signed receipt, use of the Post Office "Carrier Route Pre-Sort" 
      Service through a bonded mailing house as evidenced by the Post Office 
      date-certification of the number of pieces received from the mailing 
      house for each building and the mailing house adressee list or regular 
      first class mail documented by Post Office form #P.O. 3877.




      DHCR instructions further provide that the proof(s) of receipt, properly 
      signed and dated (by the tenant, the post office, and the mailing house, 
      as appropriate) will be considered adequate by the DHCR to establish the 
      tenant's 90 day challenge period, which will begin on the date of 
      receipt.













          EC410412RO

      To document the mailing of the apartment registration to the tenant of 
      Apartment 17B, the owner has submitted a Certificate of Mailing (Post 
      Office Form #P.O. 3877) which lists that apartment and its tenant and is 
      postmarked June 28, 1984 by the Post Office.  The Commissioner finds 
      that the documentation conforms to DHCR service requirements and proves 
      mailing of the apartment registration to the tenant of Apartment 17B on 
      June 28, 1984.

      Section 25 of the former Rent Stabilization Code provides that a fair 
      market rent appeal must be filed within 90 days of receipt by the tenant 
      of the initial legal regulated rent notice (DC-2 notice).  Section 26 of 
      the former Code provides that such notice must be served on the tenant 
      by certified mail.

      The Commissioner finds that the owner has adequately documented service 
      of the DC-2 notice on the tenant of apartment 14B by certified mail as 
      required by Section 26 of the former Code.

      In the instant case, the owner has submitted data for the subject line 
      and the B line of apartments which indicated that only apartments 14B 
      and 17B both contained the same number of rooms as the subject apartment 
      and were rented to a first stabilized tenant within the required period, 
      four years prior to or one year after the commencement date of the 
      initial stabilized lease for the subject apartment.  The owner 
      documented the initial stabilized rents for those apartments with the 
      initial stabilized lease and Form DC-2 for Apartment 14B, and a 
      decontrol order, a rent ledger, and Form RR-1 for Apartment 17B and, 
      having submitted adequate proof of service of those notices, documented 
      that those rents are no longer subject to challenge.

      The Commissioner therefore finds that the comparability data submitted 
      by the owner is adequate to warrant the use of Apartments 14B and 17B as 
      comparables in determining the fair market rent for the subject 
      apartment.  As both of these apartments were rented to initial 
      stabilized tenants pursuant to leases ending less than one year prior to 
      the commencement date of the initial lease for the subject apartment, no 
      updating of the comparable rents is required.  Averaging these two 
      comparable rents results in an average comparable rent of $918.50 
      ($1025.00 + $812.00 divided by 2 = $918.50).

      The fair market rent is determined as follows: The result of the special 
      guideline formula, $803.52, is averaged with the average comparable rent 
      amount of $918.50, resulting in a fair market rent of $861.01.

      Since the $980.00 per month initial rent challenged by the tenant 
      exceeds the $861.01 fair market rent established in this order, the 
      initial legal regulated rent is adjusted from $980.00 to $861.01 
      effective April 1, 1982, the date of commencement of the initial rent 
      stabilized lease.

      The owner is directed to adjust the rent to the stabilized rent 
      consistent with this decision; to refund or fully credit against future 






          EC410412RO

      rents over a period not exceeding six months from the date of receipt of 
      this order,  any rent paid by the tenant herein in excess of the lawful 
      stabilized rent as set forth on the attached Rent Calculation Chart, 
      which is incorporated into this order, as well as any security in excess 
      of one month's rent pursuant to Section 2525.4 of the Rent Stabilization 
      Code.  The total excess rent due the tenants is $8,835.12.

      In the event the owner does not take appropriate action to comply within 
      sixty (60) days from the date of this order, the tenant may credit the 
      excess rent collected by the owner against the next month(s) rent until 
      fully offset.

      The owner is directed to reflect the findings and determinations made in 
      this order on all future registration statements, including those for 
      the current year if not already filed, citing this order as the basis 
      for the change.  Registration statements already on file, however, 
      should not be amended to reflect the findings and determinations made in 
      this order.  The owner is further directed to adjust subsequent rents to 
      an amount no greater than that determined by this order plus any lawful 
      increases.

      If the owner has already complied with the Rent Administrator's order 
      and there are arrears due to the owner as a result of the instant 
      determination, the tenant shall be permitted to pay off the arrears in 
      twenty four equal monthly installments.  Should the tenant vacate after 
      the issuance of this order or have already vacated, said arrears shall 
      be payable immediately.

      THEREFORE, in accordance with the Rent Stabilization Law and Code, it is

      ORDERED, that this petition be, and the same hereby is, granted, and 
      that the Commissioner's prior order be, and the same hereby is, modified 
      pursuant to this order and opinion.


      ISSUED:



                                                                    
                                      JOSEPH A. D'AGOSTA
                                      Deputy Commissioner






    

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